Hong Kong's inflation surges to 16-year high
Source: Bloomberg News |
August 23, 2011, Tuesday
|
Print Edition
Print Edition
HONG Kong's inflation surged to 7.9 percent last month, the fastest pace since 1995, on food, rents and a distortion caused by a government housing subsidy.
The gain from a year earlier compared with the median 8.2 percent estimate of 13 economists in a Bloomberg News survey and a 5.6 percent increase in June. The latest number, reported on a government website yesterday, was boosted by a waiver of public housing rentals in July last year that was not repeated in the same month this year.
Asian economies are grappling with inflationary pressures even as slumping equity markets add to the likelihood of weaker global growth and reduced demand for exports. In Hong Kong, the economy will probably shrink this quarter after contracting in the previous three months, according to Morgan Stanley and Daiwa Capital Markets.
"Underlying inflationary pressure is still on the rise," said Kelvin Lau, an economist at Standard Chartered in Hong Kong. Excluding the effect of the waiver, inflation is likely to have been less than 6 percent last month, he said.
McDonald's, subway operator MTR and Hong Kong Disneyland Resort are among businesses raising prices. Food costs jumped 7.4 percent in July from a year earlier as pork prices climbed. Private home rentals rose 7.6 percent.
The absence of the subsidy meant public housing rents rose more than 3,000 percent.
The government said inflation is likely to remain "notable in the near term" for reasons that included elevated global food costs. Excluding distortions from government subsidies, inflation was 5.8 percent last month, compared with 5.5 percent in June.
The Hang Seng Index rose 0.5 percent yesterday but is down about 14 percent since August 1 as a faltering US economy and a failure to resolve the European sovereign debt crisis undermine confidence and dim the outlook for global growth.
Francis Lun, managing director at Lyncean Holdings, an investment holding company in Hong Kong, said: "Investor sentiment is still very weak as people are still not convinced that the market has bottomed."
The gain from a year earlier compared with the median 8.2 percent estimate of 13 economists in a Bloomberg News survey and a 5.6 percent increase in June. The latest number, reported on a government website yesterday, was boosted by a waiver of public housing rentals in July last year that was not repeated in the same month this year.
Asian economies are grappling with inflationary pressures even as slumping equity markets add to the likelihood of weaker global growth and reduced demand for exports. In Hong Kong, the economy will probably shrink this quarter after contracting in the previous three months, according to Morgan Stanley and Daiwa Capital Markets.
"Underlying inflationary pressure is still on the rise," said Kelvin Lau, an economist at Standard Chartered in Hong Kong. Excluding the effect of the waiver, inflation is likely to have been less than 6 percent last month, he said.
McDonald's, subway operator MTR and Hong Kong Disneyland Resort are among businesses raising prices. Food costs jumped 7.4 percent in July from a year earlier as pork prices climbed. Private home rentals rose 7.6 percent.
The absence of the subsidy meant public housing rents rose more than 3,000 percent.
The government said inflation is likely to remain "notable in the near term" for reasons that included elevated global food costs. Excluding distortions from government subsidies, inflation was 5.8 percent last month, compared with 5.5 percent in June.
The Hang Seng Index rose 0.5 percent yesterday but is down about 14 percent since August 1 as a faltering US economy and a failure to resolve the European sovereign debt crisis undermine confidence and dim the outlook for global growth.
Francis Lun, managing director at Lyncean Holdings, an investment holding company in Hong Kong, said: "Investor sentiment is still very weak as people are still not convinced that the market has bottomed."
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